M/s National Coal Development Corporation Staff Co-operative Credit Society Limited, Kolkata V. ITO, WD-32(2), KOLKATA, Kolkata

ITA 295/KOL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1729 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 05-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 24-03-2015
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN
• Keywords: Business income; Opportunity of being heard
• Section: 143(3)

Judgement Text

I.T.A. NO. 295/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 295/KOL/ 2015 ASSESSMENT YEAR: 2011-2012 M/S. NATIONAL COAL DEVELOPMENT CORPORATION STAFF COOPERATIVE CREDIT SOCIETY LIMITED,................ .......................APPELLANT 25, BRABOURNE ROAD, 5 TH FLOOR, KOLKATA-700 001 [PAN: AAALN 0409 N] -VS.- INCOME TAX OFFICER,................................ ..................................RESPONDENT WARD-32(2), KOLKATA, 10B, MIDDLETON ROW, KOLKATA-700 071 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, FOR THE ASSESSEE MD. GHAYAS UDDIN, JCIT, SR. D.R., FOR THE DEPARTMEN T DATE OF CONCLUDING THE HEARING : MARCH 30, 2017 DATE OF PRONOUNCING THE ORDER : MAY 12, 2017 O R D E R PER SHRI P.M. JAGTAP, A.M. .: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKATA DAT ED 14.01.2015. 2. THE FIRST ISSUE INVOLVED IN THIS APPEAL AS RAISE D IN GROUNDS NO. 1 & 2 RELATES TO THE DISALLOWANCE OF RS.57,87,272/- MAD E BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON AC COUNT OF ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80P IN RESPECT OF INTEREST INCOME. 3. THE ASSESSEE IN THE PRESENT CASE IS A COOPERATIV E CREDIT SOCIETY WITH ITS MEMBERS BEING STAFF MEMBERS OF THE NATIONA L COAL DEVELOPMENT I.T.A. NO. 295/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 2 OF 6 CORPORATION (NCDC). THE RETURN OF INCOME FOR THE YE AR UNDER CONSIDERATION WAS FILED BY IT ON 23.03.2012 DECLARI NG TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION UNDER SECTION 80P. I N THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 31.01.2014, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 8 0P IN RESPECT OF INTEREST ON FIXED DEPOSIT (GENERAL) AMOUNTING TO RS .57,87,272/- WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT THE SAID INCOME CONSTITUTED INCOME OF THE ASSESSEE CHARGEABLE TO TA X UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE SAME WAS NOT EL IGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A) OF THE ACT. FOR THIS CONCLU SION, THE ASSESSING OFFICER RELIED ON THE DECISION OF THE HONBLE SUPRE ME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LIMITED VS.- ITO [188 TAXMAN 282 (SC). ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A SIMILAR ISSUE WAS INVOLVED IN THE CASE OF THE ASSES SEE FOR A.Y. 2006-07, 2007-08 AND 2009-10 AND THE SAME WAS DECIDED BY THE DIVISION BENCH OF THIS TRIBUNAL VIDE PARAGRAPHS NO. 6 & 7 OF ITS COMM ON ORDER DATED 02.03.2016 PASSED IN ITA NOS. 1792 TO 1794/KOL/2012 AND C.O. NOS. 5 TO 7/KOL/2013 AS UNDER:- 6. AS REGARDS THE COMMON ISSUE INVOLVED IN THE CRO SS OBJECTIONS OF THE ASSESSEE RELATING TO ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) IN RESPECT OF INTEREST ON BANK FIXED DEPOSITS (GENE RAL), THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT EVEN THOUGH THE SAME HA S BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 BY RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F TOTGARS CO-OPERATIVE SALE SOCIETY LIMITED (SUPRA), THE HONBLE KARNATAKA HIGH COURT IN THE DECISION RENDERED SUBSEQUENTLY IN THE CASE O F TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS- ITO [2015] 55 TAXMANN.COM 447 HAS DISTINGUISHED THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LIMITED (SUPRA) ON CERTAIN SPECIFIC ASPECTS AND AFT ER TAKING INTO CONSIDERATION THIS DISTINCTION POINTED OUT BY THE H ONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANT S SOUHARDA CREDIT COOPERATIVE LTD. (SUPRA), THE TRIBU NAL IN THE CASE OF ITO-VS- THE BASKARA COOPERATIVE CREDIT SOCI ETY LTD. DECIDED VIDE ITS ORDER DATED 18 TH NOVEMBER, 2015 PASSED IN ITA I.T.A. NO. 295/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 3 OF 6 NO.1890/KOL/2012 HAS RESTORED THE SIMILAR ISSUE TO THE FILE OF THE AO AFTER RECORDING ITS OBSERVATIONS IN PARAGRAP H NOS.11 AND 12 AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND C AREFULLY PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LIMITED (SUPRA) CITED BY T HE LD. D.R. IN SUPPORT OF THE REVENUES CASE ON THE ISSUE UNDER CONSIDERAT ION, THE ASSESSEE- SOCIETY BESIDES CARRYING ON THE BUSINESS OF PROVIDI NG CREDIT FACILITIES TO ITS MEMBERS WAS ALSO MARKETING ITS AGRICULTURAL PRO DUCE. THE SALE PROCEED OF SUCH AGRICULTURAL PRODUCE, WHICH WAS PAY ABLE TO ITS MEMBERS, IN MANY CASES, WAS RETAINED BY THE ASSESSEE-SOCIETY AND THE SAME WAS INVESTED IN SHORT-TERM DEPOSITS/SECURITIES. IN THES E FACTS AND CIRCUMSTANCES OF THE CASE, INTEREST INCOME RECEIVED ON SHORT-TERM DEPOSITS/SECURITIES WAS HELD TO BE CHARGEABLE TO TA X UNDER THE HEAD INCOME FROM OTHER SOURCES BY THE HONBLE SUPREME COURT OBSERVING THAT THE AMOUNT INVESTED BY THE ASSESSEE WAS A LIABILITY PAYABLE TO ITS MEMBERS, AND, THEREFORE, THE INTEREST INCOME COULD NOT BE SAID TO BE ATTRIBUTABLE TO THE ACTIVITY MENTIONED IN SECTION 8 0P(2)(A)(I). IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIM ITED (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, THE AMOUNT, WH ICH WAS INVESTED IN BANK TO EARN INTEREST, WAS NOT AN AMOUNT DUE TO ANY MEMBER AND WHICH WAS NOT THE LIABILITY SHOWN IN THEIR ACCOUNTS. IN F ACT, THE SAID AMOUNT, WHICH WAS IN THE NATURE OF PROFIT AND GAINS, WAS NO T IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE M EMBERS AS THERE WERE NO TAKERS AND THE SAME, THEREFORE, HAD BEEN DEPOSIT ED IN A BANK SO AS TO EARN INTEREST. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, AS INVOLVED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPER ATIVE LIMITED (SUPRA), THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LIMITED WAS FOUND TO BE DI STINGUISHABLE ON FACTS BY THE HONBLE KARNATAKA HIGH COURT AND THE I NTEREST INCOME RECEIVED BY THE ASSESSEE-SOCIETY ON BANK DEPOSITS W AS HELD TO BE ITS BUSINESS INCOME BEING ATTRIBUTABLE TO CARRYING ON T HE BUSINESS OF BANKING ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2) (A)(I) OF THE ACT. 12. KEEPING IN VIEW THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LIMITED (SUPRA ) CITED BY THE LD. D.R. AND THE DECISION OF THE HONBLE KARNATAKA HIGH COUR T IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITE D (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, THE QUESTION T HAT ARISES IN THE CASE ON HAND, IS WHETHER THE INVESTMENT, WHICH IS MADE BY T HE ASSESSEE-SOCIETY AND WHICH HAS FETCHED INTEREST INCOME IN QUESTION, IS MADE OUT OF ITS OWN SURPLUS FUND, AS WAS THE CASE IN TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITE D (SUPRA) OR THE SAME IS MADE OUT OF THE AMOUNT PAYABLE BY THE ASSES SEE-SOCIETY TO ITS MEMBERS, WHICH REPRESENT ITS LIABILITY AS WAS THE C ASE IN TOTGARS COOPERATIVE SALE SOCIETY LIMITED. IN THIS REGARD, I T IS OBSERVED THAT THIS ASPECT HAS NOT BEEN SPECIFICALLY CONSIDERED EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT(APPEALS) IN THEIR RESPECTIVE ORDE RS AND, THEREFORE, THERE IS NO FINDING SPECIFICALLY GIVEN BY THEM ON THIS RE LEVANT ASPECT. IN THIS REGARD, A PERUSAL OF THE RELEVANT BALANCE-SHEET OF THE ASSESSEE AS ON 31.03.2009 (COPY OF WHICH AT PAGES 67 & 68 OF THE P APER BOOK), SHOWS THAT THE TOTAL INVESTMENT MADE BY THE ASSESSEE-SOCI ETY WAS RS.22.08 I.T.A. NO. 295/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 4 OF 6 CRORES AS ON 31.03.2009, WHEREAS THE RESERVES & SUR PLUS AND PROFIT & LOSS A/C. BALANCE AS ON THE SAID DATE WERE RS.1.76 CRORES AND 1.73 CRORES RESPECTIVELY. THE MAJOR AMOUNT APPEARING ON THE LIA BILITY SIDE OF THE BALANCE-SHEET AS ON 31.03.2009 WAS DEPOSIT AND OTHE R ACCOUNT AGGREGATING TO RS.28.89 CRORES, WHICH COMPRISED OF VARIOUS FUNDS AND DEPOSITS. KEEPING IN VIEW THESE FACTS AND FIGURES, WE ARE OF THE VIEW THAT THE ISSUE AS TO WHETHER THE RELEVANT INVESTMENT IS MADE BY THE ASSESSEE OUT OF ITS OWN SURPLUS FUNDS OR OUT OF THE AMOUNT P AYABLE TO ITS MEMBERS, WHICH REPRESENT ITS LIABILITY, REQUIRES VERIFICATIO N IN ORDER TO DETERMINE THE EXACT HEAD OF INCOME UNDER WHICH THE INTEREST O N SUCH INVESTMENT IS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE BY A PPLYING THE RELEVANT CASE LAWS. WE, THEREFORE, SET ASIDE THE IMPUGNED OR DER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTE R VERIFYING THE RELEVANT FACTUAL POSITION FROM RECORD AND AFTER GIVING THE A SSESSEE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. GROUND NO. 2 OF THE REVENUES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATIS TICAL PURPOSES. 7. RELYING ON THE DECISION OF THE TRIBUNAL IN THE C ASE OF BAKSARA COOPERATIVE CREDIT SOCIETY LTD. (SUPRA), THE LD. COUNSEL FOR TH E ASSESSEE HAS CONTENDED THAT THE SIMILAR ISSUE INVOLVED IN THE CASE OF THE ASSES SEE FOR ALL THE THREE YEARS UNDER CONSIDERATION MAY ALSO BE RESTORED TO THE FILE OF T HE AO AND SINCE THE LD. DR HAS NOT RAISED ANY OBJECTION IN THIS REGARD, WE SET ASI DE THE IMPUGNED ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTION AS GIVEN IN THE CASE OF BAKSARA COOPERATIVE CREDIT SOCIETY LTD.(SUPRA). THE CROSS O BJECTIONS FILED BY THE ASSESSEE THUS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE S. 5. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDER ATION AS WELL AS ALL THE RELEVANT MATERIAL FACTS ARE SIMILAR TO THAT OF A.Y. 2006-07, 2007-08 AND 2009-10, I RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL FOR THE SAID YEARS AND RESTORE THE MATTER TO THE FILE OF TH E ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTION AS GIVEN IN AY 2006- 07, 2007-08 AND 2009-10. GROUNDS NO. 1 & 2 OF THE A SSESSEES APPEAL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 6. GROUNDS NO. 3 & 4 RAISED IN THIS APPEAL OF THE A SSESSEE ARE NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING. THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. I.T.A. NO. 295/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 5 OF 6 7. THE ISSUE INVOLVED IN GROUND NO. 5 RELATES TO TH E ADDITION OF RS.5,26,459/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF UNPAID DIVIDEND. 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT FURNISH THE RELEVANT DETAILS OF UNPAID DIVIDEND AMOUNTING TO RS.5,26,459/- SHOWN IN THE BALANCE-SHEET AS ON 31.0 3.2013. THE ASSESSING OFFICER, THEREFORE, TREATED THE SAID LIABILITY AS B OGUS AND ADDED THE AMOUNT OF RS.5,26,459/- TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE SAID ADDITION MA DE BY THE ASSESSING OFFICER HOLDING THAT IT WAS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 41(1) OF THE ACT. 9. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY S UBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE PROVISION FOR DIVIDEN D BEING AN ITEM OF PROFIT & LOSS APPROPRIATION A/C, IT HAD NO IMPLICAT ION ON THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE ASSESSABLE TO TAX A S THE SAME WAS NEVER CLAIMED AS DEDUCTION AND THIS BEING SO, THE PROVISI ON OF SECTION 41(1) CANNOT BE INVOKED TO ADD THE AMOUNT OF UNPAID DIVID END TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE SAME REPRESENTED A LIABILITY NOT IN-EXISTENCE. I, THEREFORE, DELETE TH E ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPE ALS) ON THIS ISSUE AND ALLOW GROUND NO. 5 OF THE ASSESSEES APPEAL. 10. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 6(A ) RELATING TO THE DISALLOWANCE OF RS.6,00,000/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40( A)(IA) OF THE ACT ON ACCOUNT OF RENT PAID BY THE ASSESSEE WITHOUT DEDUCT ION OF TAX AT SOURCE AS REQUIRED BY THE PROVISIONS OF SECTION 194(I), THE L D. COUNSEL FOR THE ASSESSEE HAS NOT RAISED ANY CONTENTION ON MERIT TO DISPUTE THE SAME. HE, HOWEVER, HAS RAISED AN ALTERNATIVE CONTENTION ON TH IS ISSUE BY REFERRING TO GROUND NO. 6(B) RAISED IN THE APPEAL OF THE ASSE SSEE THAT THE SAID I.T.A. NO. 295/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 6 OF 6 DISALLOWANCE MADE UNDER SECTION 40(A)(IA) HAS RESUL TED INTO ENHANCEMENT OF THE INCOME OF THE ASSESSEE, WHICH IS ENTITLED FOR DEDUCTION UNDER SECTION 80P(2) OF THE ACT. SINCE TH IS ALTERNATIVE CLAIM OF THE ASSESSEE IS DULY SUPPORTED BY THE DECISION OF T HE DIVISION BENCH OF THIS TRIBUNAL AT PUNE IN THE CASE OF ITO VS.- KARA D MERCHANT SAH. CREDIT SANSTHA RENDERED VIDE ITS ORDER DATED 28.02.2011 PA SSED IN ITA NO. 159/PN/2009, I DIRECT THE ASSESSING OFFICER TO ALLO W DEDUCTION UNDER SECTION 80P(2(A) ON THE ELIGIBLE INCOME OF THE ASSE SSEE AS ENHANCED BY THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) ON AC COUNT OF PAYMENT OF RENT. GROUND NO. 6(B) OF THE ASSESSEES APPEAL IS A CCORDINGLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 12, 2017. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 12 TH DAY OF MAY, 2017 COPIES TO : (1) M/S. NATIONAL COAL DEVELOPMENT CORPORATION STAFF COOPERATIVE CREDIT SOCIETY LIMITED, 25, BRABOURNE ROAD,5 TH FLOOR, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-32(2), KOLKATA, 10B, MIDDLETON ROW, KOLKATA-700 071 (3) COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKA TA; (4) COMMISSIONER OF INCOME TAX ,KOLKAT A (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O. INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.